Game of Stones: Disrupting the Diamond Trade Excerpts from Morgan Stanley Report

July 26, 2018

Here are some excerpts for a recent Morgan Stanley Research Report on lab grown diamonds...

Diamonds grown in the lab have matured enough in size and quality to compete against traditionally mined gems.

Indeed, commercially viable lab-grown diamonds that are less expensive and conflict-free may well appeal to younger, socially conscious consumers, with disruptive consequences for the $14 billion global rough diamond market.

Many of today's younger consumers aren’t only open to alternatives, they are willing to pay a premium for products that have a low environmental impact or are socially responsible.

Morgan Stanley estimates that the capital costs for lab-grown diamonds are negligibly lower than mined diamonds: $343 per carat vs. $367 per carat for mined.

Yet, at the wholesale level, they may sell at a 30% to 40% discount to mined stone. This is in part because lab-grown diamond producers are a fragmented, independent channel, while the mined diamond industry is highly consolidated and coordinated, in terms of supply, distribution, marketing and pricing. The labs aren’t just competing with the mined diamond industry, but also with each other for market share.

Sounds like a great opportunity for today's lab grown diamond consumer.